Tax reform passage tops businessmen’s wish list

MANILA, Philippines - The enactment of key measures in the first package of the Comprehensive Tax Reform Program is among the most important measures the Philippines needs this year to further perk up its economy, according to foreign business groups.

Foreign business leaders surveyed by The STAR have cited the tax reform program as “high on the agenda” among the measures they would want to see happening in the country within 2017.

“We would like to see key reforms passed this year, such as the tax reform proposals. Coupled with this we are hoping that the government in partnership with the private sector is able to identify action points to level the playing field. If the objective is to collect more taxes, this can be done only when we have achieved a level playing field,” said Rex Daryanani, president of the Federation of Indian Chambers of Commerce Philippines Inc.

Nordic Chamber of Commerce of the Philippines president Bo Lundqvist said the proposed tax reform program coupled with the lifting of the restrictions on foreign ownership would certainly bolster competitiveness of the Philippine economy.

European Chamber of Commerce of the Philippines president Guenter Taus, for his part, said his group, which comprises over 700 member firms, acknowledges that the Comprehensive Tax Reform Program is imperative in making the Philippine business environment more competitive.

Taus said this should go along with other essential reforms such as the creation of a competitive fiscal incentives regime, promotion of transparency and integrity, judicial improvement, and close partnership with local government units to increase the ease of doing business.

While the foreign business groups expressed a general support to the proposed tax reform package of the Department of Finance, there are several provisions they want scrapped.

“We also expect the first phase of tax reform enacted this year. However, in the tax reform bill we have recommended to Congress that it retain present fiscal incentives for Regional Operating Headquarters, which employ 50,000 persons, and VAT (value added tax) zero-rating for goods and services purchased by exporters,” said John Forbes, senior advisor of the American Chamber of Commerce of the Philippines.

“We also share concerns of the automotive industry over the very high proposed excise taxes on expensive cars,” Forbes added.

The Duterte administration’s tax reform proposal is outlined in House Bill 4774, which seeks to lower personal income tax rates while providing revenue enhancing measures, which among others, aim to reform the excise tax system for fuel and automobiles and broaden the VAT base, while retaining exemptions for seniors and persons with disabilities.